Fitch Affirms Homestreet Bank's RMBS Servicer Rating

Fitch Ratings has affirmed HomeStreet Bank's (HSB) U.S. residential mortgage servicer ratings as follows:

--U.S. residential primary servicer rating for Prime product at 'RPS3-'; Outlook revised to Positive from Stable.

The affirmation and revision of the Rating Outlook is based on HSB's experienced servicing platform, significant improvements to servicing technology and processes, established internal control environment, and improvement in internal audit results. However, the rating also reflects the relatively low volume of REO assets that the company historically has handled. In addition, the rating incorporates the financial condition of HSB, a non-publicly rated entity.

Since the prior review, HSB implemented an interactive voice response system (IVR) that includes enhanced screen interaction for the agents and an automated call distribution system (ACD) to route calls to the appropriate department and provide call statistic reporting. In addition, the company automated the generation of property inspections requests, expanded its use of process scripts, enhanced its document imaging system, and upgraded its data center. Also, since Fitch's prior review, HSB expanded its servicing operations to a new location at Federal Way in Seattle, WA and relocated its cash processing, investor accounting, loan control, customer service, and escrow administration to the new location.

As of Sept. 30, 2014, HSB was servicing over 71,000 loans totaling $15 billion, an increase from 64,000 loans totaling $13.1 billion as of Dec. 31, 2013. The servicing portfolio included over 4,700 non-agency prime loans totaling $1.6 billion. In 2Q2014, HSB sold approximately $3 billion in mortgage servicing rights. While not a large servicer, the company's 79 full time equivalent (FTE) servicing staff is adequate for the scale of its activities.

HSB has an established REO department that handles a relatively low volume of REO assets. Over 63% of the current portfolio was comprised of FNMA and FHLMC loans which limited the volume of REO properties that HSB managed during the review period.

HSB is a wholly owned subsidiary of HomeStreet, Inc. (HomeStreet). HomeStreet is a diversified financial services company headquartered in Seattle that has been in operation including various predecessor entities for over 90 years. HSB is a Washington state-chartered savings bank with residential mortgage servicing operations located in several sites in the Seattle area. The company's lending operations are located in the Pacific Northwest, Idaho, California, and Hawaii, where most of its mortgage origination activity is conducted.

Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch's residential servicer rating program, please see Fitch's report 'Rating U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria', dated Jan. 31, 2014 which is available on the Fitch Ratings web site at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Rating Criteria for Structured Finance Servicers' (Jan. 31, 2014);

--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria' (Jan. 31, 2014).

Applicable Criteria and Related Research:

Rating Criteria for Structured Finance Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731750

Rating Criteria for US Residential and Small Balance Commercial Mortgage Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731747

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=959275

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Contacts:

Fitch Ratings
Primary Analyst:
Thomas Crowe, +1-212-908-0227
Senior Director
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst:
Roelof Slump, +1-212-908-0705
Managing Director
or
Committee Chairperson:
Grant Bailey, +1-212-908-0544
Managing Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

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